HELP!! New to the daycare game :)

Hi Everyone

My name is Melissa and I am 42 years old. I am happily married and live in North York ( north end of Toronto) Ontario

I just started providing home daycare. I have a little girl who will be one in a few weeks and when my mat leave was up ( I had to quit working in July 2011 for medical reasons) I just could not go back to work.. I waited over 20 years to be a mom and I do not want to miss a minute of her life

I started providing daycare July 12 2012 I have one little boy who is 3 who is with me 2 days a week and he will be here full time in September. I also have a little girl starting the last week of August full time.

I charge $ 40 a day full time, $25 a day for part time care and $ 10 for before or after school care.

The areas I need help with are the paperwork and LEGAL deductions.

I operate the daycare under the name Rhynold Family Daycare as there is a Melissa's daycare in the immediate area.

Do I need to register my daycare as a business?
and what can I legally declare as expenses.. I know the list is endless but I am afraid I might over deduct and find myself in trouble with Revenue Canada.

I also know I can declare some of the household bills. How do I figure out much of those bills I can write off? We rent a 1100 square foot 3 bedroom bungalow and for the daycare I use the living and dining room, bathroom, kitchen ONE bedroom and the basement in bad or too hot weather.

I have been on the government website but all the info was making my head spin.

If any experienced care provider is willing to help I would really appreciate it.

I look forward to getting to know everyone and share stories and experiences.:yes:

Everything you need to know 'tax deduction' wise is on this page here ... claiming your income, expenses, issuing receipts and so forth

http://www.cra-arc.gc.ca/tx/bsnss/tp.../menu-eng.html

Basically you can claim a list something like this

• Food & Kitchen Supplies
• Toys & Equipment
• Craft Supplies
• Field Trips & Outings
• Gifts & Seasonal Celebrations
• Office Expenses
• Advertising & Website
• Business Name Registration
• Accountant / Accounting Software expenses for taxes
• Daycare Maintenance & Repairs
• Professional Development
• Interest on Line of Credit for Business
• Interest on Credit card for business
• Vehicle Expenses ~ track KM used for business keep reciepts for all vehicle related costs
• Business Liability Insurance
• % Home Owners Insurance
• % of annual Mortgage Interest
• % of annual Property Tax
• % of annual Gas bill total
• % of annual Reliance Water Heater Bill
• % of annual Hydro bill total
• % of Internet Bill if you have a business website you need to maintain
• Phone ~ not the land line unless the daycare has its OWN number but you can claim the 'call answer / display / forwarding' services if needed for the business

As for registering your business name ~ in Ontario under the Business Names Act YES if you advertize your business by any name other than your legal name you need to register it with Service Ontario .... however daycare is exempt from the HST, WSIB and other things so just click 'no' when it asks you you are only registering your BUSINESS NAME ~ it costs $60 and is good for 5 years .... benefit to this is also that you will get a Business Identification Number so you will not have to provide your SIN to clients on their tax receipt!

http://www.ontario.ca/en/services_fo.../STEL02_039990

Calculating 'shared household expenses' the equation from CRA is as follows

Quote:

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Rooms used for both daycare and personal living

If you use part of your home for both your daycare and personal living, calculate how many hours in the day you use the rooms for daycare, then divide that amount by 24 hours. Multiply the result by the daycare part of your total annual home expenses (see the previous example). This will give you the home expenses you can deduct.

If you run the business for only part of the week or year, reduce your claim accordingly.

Example
Danny runs a daycare in his home weekdays from 7:00 a.m. to 5:00 p.m. (10 hours out of a 24-hour day.) The children use an area of 35 square metres. The house is 100 square metres, and the annual home expenses are $5,800.

The calculation is as follows:

(10 ÷ 24 hours) × (35 ÷ 100 metres) × $5,800 expenses = $845.83

The daycare only operates 5 days per week, so Danny has to do another calculation.

The other calculation would be:

$845.83 × (5 ÷ 7 days) = $604.16

Danny can deduct a total of $604.16 for home expenses.

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If you have not yet created one ~ get a contract! Lots of examples on the forum just search 'contracts' and you should find the threads!

Hope that helps and congratulations on your long awaited addition to your family and the world of home childcare!

WOW!! Thanks so much for all that information. There are expenses listed I did not even think of.

I have the calculation for figuring out the percentage of allowable household expenses deductions but I can NOT figure out to do the actual calculation. Math was never my strong point. I failed that class time and time again.

I really appreciate you taking the time to share this info and for the kind words. I hope you have a great day.

Quote:

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Originally Posted by DORITOSGIRL

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I have the calculation for figuring out the percentage of allowable household expenses deductions but I can NOT figure out to do the actual calculation. Math was never my strong point. I failed that class time and time again.

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LOL I hear ya ~ put your equation in Goggle search and hit enter and it will do the math for you ;)

Just on a personal note, I would find an accountant to do your taxes. They know what you can and cannot claim. What our accountant told us this year was anything you used for the daycare, you can claim. It cost us approx $200 to file both of my businesses and a well-worth $200!

Good luck!

Quote:

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Originally Posted by Inspired by Reggio

As for registering your business name ~ in Ontario under the Business Names Act YES if you advertize your business by any name other than your legal name you need to register it with Service Ontario .... however daycare is exempt from the HST, WSIB and other things so just click 'no' when it asks you you are only registering your BUSINESS NAME ~ it costs $60 and is good for 5 years .... benefit to this is also that you will get a Business Identification Number so you will not have to provide your SIN to clients on their tax receipt!

http://www.ontario.ca/en/services_fo.../STEL02_039990

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. WOW that was super easy...what have I been putting it off for?! Thanks so much for the link!

I agree play and learn. I use an accountant and he always finds extra savings. It costs about 200.00 dollars (which is a business expense) and gives me piece of mind should I ever be audited.

I will use a accountant. We use one for income tax and its so worth it to know the taxes were filed properly.
Thanks for all the advice and info I really do appreciate you all taking the time from your busy days to help.